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Tamweel May Tap Debt Market Again This Year, Acting CEO Says

Tamweel PJSC may consider tapping the debt market again this year after the United Arab Emirates mortgage lender raised $300 million from the sale of Islamic bonds in January.

“We may potentially go back to the market this year for either a sukuk or securitization,” acting Chief Executive Officer Varun Sood said in an interview in Dubai today. “It would be a similar transaction to what we did earlier this year.”

The mortgage company, controlled by Dubai Islamic Bank PJSC, sold $300 million in sukuk in January, its first offering since 2008. The yield on its 5.154 percent bonds due January 2017 was at 5.13 percent today, according to data compiled by Bloomberg.

Sales of Islamic debt in the Gulf surged to $8.46 billion this year from $1.53 billion in the year-earlier period as borrowing costs tumbled to a five-month low. Average yields on sukuk from the six-nation Gulf Cooperation Council declined 41 basis points this year to 3.898 percent on March 29, the lowest since October. The rate was at 3.93 percent on April 13, the HSBC/Nasdaq Dubai GCC US Dollar Sukuk Index shows.

Mortgage Recovery

Tamweel has 3.3 billion dirhams ($900 million) of outstanding debt, including a $300 million Islamic bond due January 2013, according to data compiled by Bloomberg. The company is “preparing to meet all our commitments, but there’s been no decision whether we’ll refinance or repay the sukuk in January 2013,” Sood said.

Tamweel, which along with fellow Islamic lender Amlak PJSC provided almost 90 percent of all mortgages in the U.A.E., halted lending in October 2008 after the global credit crisis blocked its access to funds. The company resumed lending in November 2010 after Dubai Islamic Bank, the U.A.E.’s biggest bank that complies with Muslim banking rules, raised its stake in Tamweel to 58 percent to help boost the mortgage market.

Mortgage transactions at Tamweel rose 10 percent to 15 percent during the first quarter of the year from a year earlier, in line with the Dubai mortgage market as prices started to recover, Sood said.

“It’s been good news so far this year,” he said. “Prices have been rising, and villas are clearly leading the recovery.”

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